Services Energy Savings Performance Contracting

Energy Savings Performance Contracting


While Energy Savings Performance Contracts have seen a tremendous growth over the past 10 years due to the advancement of energy efficient technology , financing options and government initiatives they are still considered widely untapped resources for government owned buildings.

Energy Savings Performance Contracts (ESPC or ESC) are a progressive approach to reducing energy usage in municipal, university, school , and hospital system (MUSH) buildings thus reducing cost to taxpayers. This process consist of replacing outdated, inefficient building components such as light fixtures and HVAC mechanical systems with new, efficient systems and using the energy cost savings to pay for the upgrades over time. Typically, there are no out of pocket expenses for the building owner, as there are a variety of government and private resources to fund the upfront improvement costs.

The four parties involved in this process are :

  • Building Owner or Manager
  • Energy Service Company (ESCO)
  • Finance Provider
  • Energy Consultant, Energy Manager or Independent Owner’s Representative

The basic framework of the ESPC process is shown in this simple model.

IBTS Is Your Trusted Advisor

As a 501(c)(3) nonprofit organization IBTS serves as an advocate of ESP contracts and their ability to create local jobs, reduce the financial burden of increased energy usage, and environmental stewardship awareness but only when they are performed with the best interest of the building owner.

IBTS offers a comprehensive program to support building owners and managers in participating in ESP contracts with the support and guidance of a trusted advisor. This is a unique and invaluable service aimed to enhance the benefits provided by an ESPC while also mitigating the specific risks to which the Municipal, University, School and Hospital building owners are too often exposed.

Working with IBTS

Getting started is easy with IBTS. Whether you are a government official, school district energy manager, private owner or just interested in energy efficiency we encourage you to contact our energy management team here. 


Key Terms

Energy Savings Performance Contracting (ESPC or ESP) - developing and implementing a comprehensive project, which may include energy efficiency measures which are installed with an anticipation of payback with the cost savings of the more efficient building component . An ESPC project is delivered by an Energy Service Company (ESCO).

Energy Service Company (ESCO) - Contracting company who will implement and contract out actual Energy Efficient Measures which will provide the savings. The ESCO can be a General Contractor, HVAC company, Building Controls or any organization with experience in both Energy and Contracting.  IBTS does not deliver or compete with ESCO services, rather a third party oversight and compliance agent of this and other processes in an ESPC .

Energy Conservation Measures (ECM or EEM) - any type of project conducted or technology implemented to reduce the consumption of energy in a building. These can come in a variety of forms: water, electricity and gas being the main three for industrial and commercial enterprises. The aim of an ECM should be to achieve a saving, reducing the amount of energy used by a particular process, technology or facility.

ASHRAE Level 1, 2 and 3 Audit - American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE) provides the industry standard in Energy Audit guidelines for nonresidential buildings. ASHRAE has a Level 1, 2 and 3 Energy Audit which grow respectively more extensive from Level 1 to Level 3 audit. IBTS will typically provide the Level 1 Audit to determine eligibility but the subsequent Level 2 and 3 Audits or Investment Grade Audits are typically performed by the ESCO so that specific measures can be proposed.

Power Purchase Agreement - typically used as a separate agreement in which an outside party implements an onsite, power generating measure such as Solar PV Panels at no cost , then sell the generated power at a rate which is competitive to the local utility provider. These are not always permissible by the State Energy Office or local Utility provider.

Helpful Links:

Energy Service Coalition
National Association of Energy Service Companies
American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE)
National Association of State Energy Offices
Department of Energy - Federal Energy Management Program


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